Hunton Insurance Recovery Blog

Hunton and Williams LLP has published its 2016 Retail Industry Year in Review.  The Review discusses the key legal and regulatory developments that affected the retail industry last year.  In the Review, Hunton insurance coverage attorneys Syed Ahmad, Mike Levine and Jenn White discuss the lessons learned from insurance coverage cases that promise to have a lasting impact on retail cyber security and product contamination insurance.  As they explain, “Last year’s decisions are critical reminders that having the right insurance is key, and even unintentional missteps can ...

Last Thursday, a federal district judge in New Jersey denied, in part, Travelers Indemnity Company’s (Travelers) motion for summary judgment on claims for indemnity costs because the plaintiff, E.M. Sergeant Pulp & Chemical Company (EMS), provided sufficient evidence to raise triable questions of fact. Although the evidence was just "barely sufficient" to keep the case alive, as the court put it, and despite no direct evidence that policies were even in place during the relevant time period, the evidence was nevertheless enough to defeat the insurer’s motion.

The United States Court of Appeals for the Ninth Circuit recently held in Federal Deposit Insurance Corporation v. BancInsure, Inc., that an action by the FDIC against a failed bank’s former directors and officers was excluded by a D&O policy’s “insured vs. insured” exclusion. Against the backdrop of recent decisions finding similar exclusions to be ambiguous as to FDIC actions, such as St. Paul Mercury Ins. Co. v. Federal Deposit Ins. Corp., No. 14-56830 (9th Cir. Oct. 19, 2016) (previously discussed in this client alert), this decision shows how insurers continue to proactively adjust policy language to fit evolving and new exposures.  Policyholders should be doing the same.

Last February, a Pennsylvania federal court ordered rescission of an accidental contamination and government recall insurance policy issued to the H.J. Heinz Company after Heinz sought $25 million from its insurer for its business interruption losses sustained due to lead in its baby cereal. The district court based the rescission on findings that Heinz materially misrepresented its claim history when it purchased the policy. Heinz claimed the incorrect information was an inadvertent error by its new Global Insurance Director. Although a jury agreed that Heinz’s errors were unintentional, the district court found that even unintentional material misrepresentations were sufficient to void the contract.

The Eleventh Circuit recently held in G.M. Sign, Inc. v. St. Paul Fire and Marine Ins. Co., that, by denying coverage for a lawsuit filed against its insured, St. Paul waived the policy's notice requirements, thus obviating the need for the policyholder to provide notice of a second similar lawsuit arising out of the same acts and asserting the same claims. The policyholder, MFG.com, was sued in a class action filed in November 2008 by GM Sign, Inc., which alleged that MFG.com had sent numerous unsolicited faxes in violation of the Telephone Consumer Protection Act (TCPA), among other things. After St. Paul denied coverage, MFG.com and GM Sign stipulated to the dismissal of the first lawsuit without prejudice in July 2009. The next day, GM Sign filed a new class action complaint against MFG.com alleging the same claims on behalf of the same class of plaintiffs as the first suit. MFG.com did not tender the second suit to St. Paul. As part of the $22.5 million settlement of the second suit, GM Sign took an assignment of MFG.com's right to payment from St. Paul and filed suit to recover insurance proceeds and for bad faith. St. Paul responded, contending that MFG.com breached the policy's notice provision by failing to provide notice of the second lawsuit.

Law firms have become a popular target for cyberattacks. Sergio Oehninger and Patrick McDermott recently authored an article in the ABA’s TYL magazine regarding insurance coverage for law firms for cyber-related risks. In the article, Oehninger and McDermott identify the potential coverage issues firms may face under their typical liability policies and provide guidance for firms seeking coverage specifically written to cover cyber-related risks.

Law360 sought the perspective of Walter Andrews, head of Hunton & Williams LLP’s insurance coverage practice, when collecting its list of cases to watch in 2017. Andrews identified a case pending with the Texas Supreme Court – USAA Texas Lloyds Co. v. Menchaca, which we reported on in October.  As Andrews explained to Law360, “If the Texas Supreme Court comes down in the policyholder’s favor here, it would provide a substantial weapon for policyholders’ arsenals, as far as what they have to [use against] insurers that don’t reasonably investigate claims. That would ...